Oil prices climb for second session on Middle East supply concerns

Oil prices climbed for a second consecutive session on Tuesday, driven by ongoing concerns over supply disruptions in the Middle East due to the US-Israeli war on Iran. These worries are currently overshadowing indications of recovering crude exports from the region.

Brent crude futures for November delivery increased by $1.71, or 1.6%, to $106.99 a barrel as of 0626 GMT. The more actively traded December Brent contract saw a gain of $1.68, reaching $99.51 a barrel. Concurrently, US West Texas Intermediate crude was trading at $94, up $1.4, or 1.5%. Both benchmarks had closed nearly $1 a barrel higher the previous day.

KCM Trade chief analyst Tim Waterer commented that while higher oil export volumes are leaving the Gulf, many rely on less efficient and more costly ship-to-ship transfers, contributing to elevated crude prices. Preliminary figures from data provider Kpler indicated that crude exports from major Middle Eastern producers reached 12.8 million barrels per day in September, the highest level since February, bolstered by increased shipments from Saudi Arabia and the United Arab Emirates.

US and Iranian officials have engaged in separate discussions with mediators in an attempt to end the seven-month conflict. Analysts at UOB highlighted the US-Iran standoff and its potential impact on energy prices and inflation expectations as the primary risk. They also noted that Iranian officials have reportedly expressed pessimism about reaching a deal before the situation in the Strait of Hormuz escalates, thus maintaining uncertainty around oil supply.